East Coast Yachts Cash Flow Analysis

Topics: Generally Accepted Accounting Principles, Financial ratios, Financial ratio Pages: 3 (1117 words) Published: October 19, 2011
Analyze company cash flows
East Coast Yachts has a strong operating cash flow highlighted by strong earnings before interest and taxes of $88,416,000. With the addition of $20,160,000 in depreciation and subtraction of $30,921,000 in taxes, they managed an operating cash flow of $77,654,400. East Coast Yachts appears to be in or approaching a growth mode with their capital spending on fixed assets increasing by $60,000,000 during the fiscal year. However, they made the wise move of reducing the effect of this expenditure with the sale of $6,786,000 of fixed assets already on the books. Further growth is evidenced by the positive net working capital cash flow of $4,670,560, a sign of a growing company. East Coast Yachts is making effective use of their assets; this is demonstrated by their total cash flow generated by assets coming to $19,769,840 during the fiscal year. A positive sign in their cash flow to creditors is their $33,912,000 in debt service, which included the retirement of $22,800,000 in debt. It appears that they covered the cost of their debt service with the proceeds from the sale of long-term debt producing $40,000,000. East Coast Yachts had a large cash flow to stockholders at $53,550,960. They minimized the amount of cash paid to stockholders by issuing new stock producing $30,000,000 in proceeds. The wise cash flow management implemented by East Coast Yachts should be emphasized on their cash flow financial statement. Evaluate cash flow statement

East Coast Yachts generated $61.5M in cash flow from their normal yacht building and sales operations to cover the cash flows from investing and financing activities. The positive net income of $46M shows that their sales were able to outpace the cost of goods sold. An additional $20,160,000 in depreciation assisted in increasing the cash flow from operations. They increased their inventory of yachts by $5,392,800, which shows they are preparing for future growth. Accounts receivable...
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